Lecture+1

Introduction to Marketing & Its Environment

Week 1

Lecture Outline

• Marketing, Modern Definition, Nature & Scope of Marketing

• Different Concepts of Marketing

• Various functions & Functional Areas of Marketing

• The Nature of Marketing Environment & Importance of Environmental

Analysis

• External Uncontrollable forces

• Important Macro environment developments

• Influence of Society upon Business

• To gain an Overview & understand the scope of Marketing

• To know how Marketing Management has changed over a period of time

• Understand the tasks necessary for successful marketing.

• To understand the various environmental factors affecting marketing.

• To understand and use the components for effective environmental analysis.

Learning Outcomes

Marketing Defined

“Marketing is buying and selling of goods and services. Or it can be said that is

about identifying and meeting human and social needs”.

“ Marketing is buying and selling of goods profitably”.

“Marketing is business activity designed to plan, price, promote and distribute

wants satisfying goods and services to present and potential consumers ”

According to American Marketing Association

“Marketing is an organizational function and a set of processes for creating,

communicating, and delivering value to customers and for managing customer

relationships in ways that benefit the organization and its stakeholders.”

Societal Definition of Marketing

“ Marketing is a societal process by which individuals and groups obtain what they need

and want through creating, offering and freely exchanging products and services of values

with others”

Or putting it simply “ Marketing is the art of giving the „right product and services‟ to the

„right consumers‟ at the „right time‟ and at a „right price‟”. For example: Sony PlayStation3

games, Apple iPod digital music, Toyota Prius hybrid automobile and Tata ACE

Many of you will regard marketing as selling but it is not so as selling is only the tip of the

marketing iceberg.

Marketing Management

“Is the art and science of choosing target markets and getting, keeping, and growing

customers through creating, delivering, and communicating superior customer value.”

What is Marketed?

Goods

Services

Events & Experiences

Persons

Places & Properties

Organizations

Information

Ideas

Kerala Tourism has successfully branded the destination with a brand name,

logo, and the tagline “God‟s Own Country” as a natural beauty of land as a brand

to protect the brand equity , demonstrating the economic rationale of branding in

pure service industry. One of the most recognized tourism brands in India

Selling a Place

Marketing Can Promote Ideas

Who Markets?

A Simple Marketing System

The above fig shows the relationship between the industry and the market.

Sellers and buyers are connected by four flows. The inner loop shows an

exchange of money for goods and services; the outer loop shows an exchange of

information.

Key Customer Markets

Consumer Markets Global Markets

Business Markets Nonprofit/ Government Markets

Needs, Wants & Demands

Target Markets, Positioning & Segmentation

Offerings & Brands

Value & Satisfaction

Marketing Channels

Supply Chain

Competition

Marketing Environments

Core Marketing Concepts

The marketplace isn‟t what it used to be…

The New Marketing Realities

Information technology

Globalization

Deregulation

Privatization

Competition

Convergence

Consumer resistance

Retail transformation

New Consumer Capabilities

• A substantial increase in buying power

• A greater variety of available goods and services

• A great amount of information about practically anything

• Greater ease in interacting and placing and receiving orders

• An ability to compare notes on products and services

• An amplified voice to influence public opinion

Marketing Concepts

• Production Concept

• Product

• Selling

• Marketing

• Societal Marketing

• Holistic Marketings

Holistic Marketing Dimensions

The Four P‟s: Integrated Marketing

Marketing Environments

All the actors and forces influencing the company’s ability to transact business

effectively with it’s target market.

At the same time the changing environment has provided opportunities to many

companies to aggressively venture into some other new areas & market.

They do so because of the ability to scan the operating environment and spot

market trends.

Includes:

Microenvironment - forces close to the company that affect its ability to

serve its customers.

Macroenvironment - larger societal forces that affect the whole

microenvironment.

How They Get this Vital Information ?

Marketers of the organizations are responsible for collecting the information from

the environment in which operations is being carried out. WHY?

Otherwise firms have developed MIS – Marketing Information Systems that

provides vital information relating to buyers, their wants, taste, preferences,

behavior, consumption pattern across various regions and even in different

countries etc. For examples different states in India show different consumption

pattern & taste

Therefore, A MIS consists of people , equipment, and procedures to gather, sort,

analyze, evaluate and distribute needed, timely, and accurate information to

marketing decision makers. MIS has three components:

Internal Company Records

Marketing Intelligence System

Marketing Research

Internal Records

Internal records basically are reports generated within the company pertaining to

orders, sales, prices, costs, inventory levels, receivables, payables and so on.

By analyzing all these company can have a feel about the probable happenings and

can easily sense and spot the opportunities and problems within.

Order to Payment Cycle

• It is regarded as the heart of the internal records system. Sales representatives,

dealers and customers send orders to the firm.

• The sales department prepares invoices, transmit copies to various departments,

and back order out of stock items.

• Shipped items generate shipping and billing documents that go to various

departments

• Latest trends are Internets and extranets which are used heavily to perform these

steps quickly and accurately.

Sales Information Systems

•Timely information and accurate reports on current sales are needed by the

marketing managers.

• Technological gadgets are revolutionizing the sales information systems and

allowing representatives to have information instantly. For Example Reliance

Petrochemicals were using hand held billing machines. Pantaloon and Big Bazaar.

This help them to have up to date information and improve the performance of the

concerned person.

Databases, Data Warehousing and Data Mining

Companies organize their information into databases- customer databases,

product, salesperson etc. they then combine data from the different databases to

derive certain information's.

RFM: Purchase Recency, frequency and Monetary Value.

Marketing Intelligence System

It is a set of procedures and sources managers use to obtain everyday information

about developments in the marketing environments

The internal records system supplies results data and marketing intelligence

system supplies happenings data.

It may be done by reading newspapers, trade publications, talking to customers,

suppliers and distributors, emails, blogs, informal meetings and even internet for

online chat. This Intelligence system can be improved by:

• Training & motivating the sales force to spot & report new developments

• To motivate intermediaries to pass important information. Mystery Shoppers and

Research Agency are also hired.

• Network Externally : The firm can purchase competitors products, attend open

houses and trade shows, published reports, meetings, talking to employees, dealers,

distributors, suppliers and agents.

On field information & Consulting group on fact finding trip.

• Set Up Customer Advisory Panel: Customers on important advisory panels,

alumni and recruiters on panels for feedback and advices.

• Government databases: Census of India, NSSO, CSO, UNDP, NCAER etc

• Purchase information from outside suppliers: AC Nielson, ORG MARG, KPMG,

PWC & E&Y.

• Using Online customer feedback system.

Analyzing the Macro Environment

Needs & Trends:

Unmet Needs: Needs to be satisfied

Fads: Unpredictable, short-lived and without social, economic and political

significance. For example: Pager, Management education earlier.

Trends: Direction or sequence of events that has some momentum and durability.

For example social structure of a family.

Megatrends: Large social, economic, political and technological changes that are

slow to form, and once in place, they influence us for some time seven to ten years

or even longer. For Example: emails, weekends holidays etc.

Marketing Environment

Company

Demographic

Economic

Natural

Technological

Political

Cultural

Company

Customers

Intermediaries

Suppliers

Competitors

Publics

Micro Environment

Forces Affecting a Company’s Ability to Serve Customers

Publics: Any group that perceives itself having an interest in a company‟s

ability to achieve its objectives.

Company: Functional areas such as top management, finance, and

manufacturing, etc.

Competitors: Those who serve a target market with similar products and

services.

Customers: Five types of markets that purchase a company‟s goods and

services.

Suppliers : Provide the resources needed to produce goods and services.

Intermediaries: Help the company to promote, sell, and distribute its goods to

final buyers.

Markets

Consumer Markets

Global Markets

Non Profit/Government

Markets Reseller Markets

Business Markets

Macro Environment

Forces that Shape Opportunities and Pose Threats to a Company

Demographic : Monitors population in terms of age, age mix, literacy levels,

sex, race, occupation, location and other statistics.

Economic: Factors that affect consumer buying power and patterns, income

distribution.

Natural: Natural resources needed as inputs by marketers or that are affected

by marketing activities. CNG, Recyclable products, Environment safety, Water

Conservation ( RWH projects by Coca Cola)

Political: Laws, agencies and groups that influence or limit marketing actions.

Cultural: Forces that affect a society‟s basic values, perceptions, preferences,

and behaviors.

Technological: Forces that create new product and market opportunities.

Natural Environment

Factors Affecting the Natural Environment More Government Intervention Higher Pollution Levels Shortage of Raw Materials

Increased Costs of Energy

Technological Environment

Issues in Technological Environments

High R & D Budgets Rapid Pace of Change

Focus on Minor Improvements Increased Regulation

Political Environment

Key Trends in the Political Environment Changing Enforcements Increased Legislation Greater Concern For Ethics CPA has recognized six rights of consumers:

Safety

Information

Choice

Representation

Redressal

Consumer Education

Cultural Environment

Of The Universe

Of Oneself

Of Others

Of Nature

Of Organization

Of Society